Estee Lauder’s Dividend Cut Implies Persistent Stress in Medium Term, BofA Says

Estee Lauder’s (EL) quarterly dividend cut signals “stress continues to be persistent” on earnings and cash flow in the medium term, BofA Securities said Friday in a report.

The 5% decline in fiscal Q1 organic sales, led by weaker-than-expected figures in China and Asia travel retail, compared with the firm’s estimate for a 4% decline.

The firm slashed its earnings per share forecast to $1.50 for fiscal 2025 from $2.80 and cut the fiscal 2026 projection to $2.95 from $$4.55. The fiscal 2027 outlook fell to $3.50 from $5.20.

The dividend cut “implies a return to $3.50 of EPS over time assuming a 40%

payout ratio,” the report said.

BofA lowered its price target for the stock to $75 from $100 and reiterated its neutral rating.

“With China still decelerating and uncertain and a new CEO starting in January, it seems premature to ‘buy the dip’ at this point,” BofA said.

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